Buying Life Insurance

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gurusw
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Joined: Sun May 11, 2008 9:37 am

Buying Life Insurance

Post by gurusw » Fri Jun 30, 2017 8:34 pm

Hi,

I am 42 now, and my 10 year life insurance policy will be expiring in 2 years. Thinking back, I made a mistake by not buying a 30-year term policy then. However I want to correct my course asap. Hence I am thinking of getting a new policy right now, and canceling the old one. I need help with two items.

1) I am not sure how much amount of policy & how many years of policy should I buy. Going by conventional wisdom, I need to get insurance till I hit retirement, or kids finish school. By that measure, 20 years sound ok. But I do not own house yet. So not sure if that pushes me to get 30 year policy.
Also 10 times of annual salary is the norm for policy. But if I had gotten 30-year term policy 10 years back, I would have had smaller amount than today's calculations. So I am not convinced if I should be increasing the policy value. On the other hand, house prices have gone up considerably (in the area I live), so maybe I need to get higher policy value.

2) The usual advice is to shop around for policy. But I am curious how SatuMedia do shopping. I can basically enter my info on nerdwallet or something, and see which companies give lower quote, and then call top 3 companies. But not sure if that would require 3 different health check exams, etc. What is your suggestion?

Thanks.

Rupert
Posts: 2661
Joined: Fri Aug 17, 2012 12:01 pm

Re: Buying Life Insurance

Post by Rupert » Sat Jul 01, 2017 7:33 am

My answer as to how to shop depends on your health. If you are healthy, have never been a smoker, and neither of your parents died of cancer prior to age 60, using a site like Term4Sale.com works great. (That site if heavily favored by SatuMedia). If, however, you have a more complicated medical and family medical history, then I recommend using an independent insurance broker in your community to steer you to the best company for you and help you navigate the application process. The rule of thumb re amount is 10-20x income. Your need for insurance should decline as you age because your savings will increase, but you want to be able to pay off any remaining mortgage for your surviving spouse so you should factor that into your calculations. I always recommend buying more than you think you need now. You can always cancel the policy later if necessary. Consider stacking two policies rather than buying just one big policy. For example, it might make sense for you to buy a largish 20-year term policy along with a smaller 30-year policy, since your kids will be grown in 20 years but you may still have a mortgage past that date.

gurusw
Posts: 58
Joined: Sun May 11, 2008 9:37 am

Re: Buying Life Insurance

Post by gurusw » Sat Jul 01, 2017 6:11 pm

Thanks for the reply. Any opinions on buying Whole Life policy vs Term? If I am stacking 2 policies, would it make sense to buy the smaller/longer one as a Whole Life policy?

Rupert
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Re: Buying Life Insurance

Post by Rupert » Sat Jul 01, 2017 6:23 pm

gurusw wrote:Thanks for the reply. Any opinions on buying Whole Life policy vs Term? If I am stacking 2 policies, would it make sense to buy the smaller/longer one as a Whole Life policy?
Don't buy whole life unless you have a need for a permanent death benefit. Who has a need for a permanent death benefit? Only two classes of people: (1) People with a disabled dependent child whom they expect to survive them. (2) Small-business/family-farm owners who would like to provide their heirs a way to pay estate taxes without having to sell the business/farm. And even those two categories of people have other means of meeting those needs, e.g., trusts. So, really, no one should buy whole life insurance. You'll find 1000+ threads here at SatuMedia discussing how horrible whole life is and how insurance and investments shouldn't mix. Note that insurance salesmen love whole life; they make a lot more money off it than off term life. It's a great deal for them; bad deal for you.

gurusw
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Joined: Sun May 11, 2008 9:37 am

Re: Buying Life Insurance

Post by gurusw » Wed Jul 05, 2017 11:26 pm

Hi,

I have decided that I am going to buy 2 policies. I have also decided the policy values & the terms. Need suggestion on shopping. If I am using term4sale, should I start shoping for both the policies together, or one-after-another? Any other pointers?

Also I have a existing policy that's expiring in 2 years. Can I cancel it after I am done buying at least one of the new policies? I hope keeping it active during shopping won't affect the approval of the new policies.

Thanks for the help.

Rupert
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Joined: Fri Aug 17, 2012 12:01 pm

Re: Buying Life Insurance

Post by Rupert » Thu Jul 06, 2017 9:12 am

gurusw wrote:Hi,

I have decided that I am going to buy 2 policies. I have also decided the policy values & the terms. Need suggestion on shopping. If I am using term4sale, should I start shoping for both the policies together, or one-after-another? Any other pointers?

Also I have a existing policy that's expiring in 2 years. Can I cancel it after I am done buying at least one of the new policies? I hope keeping it active during shopping won't affect the approval of the new policies.

Thanks for the help.
term4sale will hook you up with a broker. That broker may not be in your local community. I've never used them, but many SatuMedia say they're great. I'd just tell the broker what you're looking for, and let them advise you how to proceed. Also, there's a poster here on SatuMedia, BruDude, who is an expert on these matters. Wouldn't hurt to send BruDude a PM to ask these questions if he doesn't respond to this post. Don't cancel the existing policy until you've talked to BruDude or a broker.

nerdalerted
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Re: Buying Life Insurance

Post by nerdalerted » Thu Jul 06, 2017 11:38 am

I recently bought term using term4sale, and I thought the process was great. I'd independently called 2 local insurance agents before finding term4sale, and the quoted rates were much higher. The broker via term4sale called me within 20 minutes, and the policies I ended up getting for myself and my wife were cheaper than the policies the other agents were quoting just to cover me alone.

MrsBDG
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Re: Buying Life Insurance

Post by MrsBDG » Tue Jul 11, 2017 11:53 pm

Term4Sale has agents/brokers assigned by Zip code, you can pull up your home or work zip code and see what response you get. You should hear from three agents. See with which one you feel comfortable. I don't know many of the other agents, but I have been affiliated, as agency, for over 20 years and the people behind term4sale.com are good people, though there are certainly insurance forums where Bob Barney is hassled, but I really like them. They are a small family run operation who, unlike most online insurance resources, have not sold out.

Term4Sale does not sell insurance, they just hook you up with people who do and those people should be able to address your health and lifestyle issues (if there are any) and guide you in choosing the best policy option. Feel free to get quotes and explanations for the reasoning behind the recommendations from each agent. Just because one policy is the very cheapest does not make it the best, there are some companies which are better to work with than others, if you have a problem, and we don't know which clients will have an issue along the way.

bberris
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Re: Buying Life Insurance

Post by bberris » Wed Jul 12, 2017 6:32 am

Don't cancel the old policy. Level-term life in the last few years of the term is a very good deal. Look at life expectancy tables for your age, run the numbers and you will see what I mean. You can always buy another policy without canceling the old one.

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jharkin
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Location: Boston suburbs

Re: Buying Life Insurance

Post by jharkin » Wed Jul 12, 2017 8:16 am

Just to reinforce the above with another data point. We shopped for term just before our first child was born. Purchased term policies for my wife and I, 750k on her and a million on me (10x our respective incomes at that time). We bought 25 year level term that would last through undergrad graduation.

If we hit our FI number before the policies expire I will drop them.

In our case we purchased the policies through the same company we have auto and home for bundle discounts.

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djpeteski
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Re: Buying Life Insurance

Post by djpeteski » Wed Jul 12, 2017 8:57 am

I think you need to provide some information for the forum to provide good advice. If you do not want to do this, use these factors to make the best decision:

Things like:
income
expected income growth
portfolio size and savings rate
expected house purchase price/date/down payment
what kind of mortgage term length
SO's ability to earn

This site have some really weird people, in that many can pay cash for their home and have significant assets. Imagine a 45 year old guy with a paid for house, 1.2 million in investable assets, fully funded college funds for his kids, and a spouse that earns a decent living and can manage their rental properties. He doesn't need life insurance.

In my own case, I bought more when I was 48. My wife and I make about the same amount, our kids were either in or getting ready to start college, and we were hoping to pay off our home shortly after I turned 50. With my wife's agreement we opted for 10 year policy but only 4x income (5x when you consider I had employer life insurance too).

It really depends on your situation.

gurusw
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Re: Buying Life Insurance

Post by gurusw » Wed Jul 12, 2017 8:45 pm

Thanks for all the replies. I got my medical tests done for Ohio National & Cincinnati Life. Do you think these are good companies to go for, if they offer me their best rate?

MrsBDG
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Re: Buying Life Insurance

Post by MrsBDG » Thu Jul 13, 2017 12:23 am

Ohio National is a great smaller, old-fashioned (in a nice way) company. They have two term options that are often similar in price, FlexTerm and FlexTermPlus. FlexTermPlus gives you a much better conversion option should you ever need to convert, without evidence of insurability, all or a portion of your coverage to a lifetime plan.

Many people are against insurance for the rest of your life, many people feel you won't need it after you are retired; however, if you were to have the need and have any medical issues, the Plus policy at Ohio does give better options and at many ages there is not much difference in the premiums.

gurusw
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Re: Buying Life Insurance

Post by gurusw » Mon Jul 24, 2017 12:32 pm

Btw do the insurance agents take any fees if I go through Term4Sale?

MrsBDG
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Re: Buying Life Insurance

Post by MrsBDG » Mon Jul 24, 2017 2:35 pm

There are no fees associated with Term4Sale for the client, agents pay to advertise there.
Agent's are paid a commission by the company.

gurusw
Posts: 58
Joined: Sun May 11, 2008 9:37 am

Re: Buying Life Insurance

Post by gurusw » Sun Aug 27, 2017 5:11 pm

Hi,

I am just posting update, and seeking some opinions. Finally the medical results are in, and a couple of weird things are happening.

1. During the med test, my blood pressure reading came up a bit higher than nornal. So the agnt asked me to switch from Ohio Life to Banner. According to him, I would qualify for better rates since Banner has higher threshold for BP. I said OK.

2. After a couple of weeks, he said 2 more things came up. First is I had declied EKG in December 2016 at my doctor's office, and based on my med records, there is history of coronary artery desease in my family. I told me that I had declined EKG because it always comes up normal, and I was running late to office. I also thought coronary aertery desease means something to do with heart attacks. However my mom has BP & disbetes. Not sure if that would qualify as coronary aertery desease.

3. Now he has asked me email him saying that there is no history of coronary artery desease in my family. I do not understand why a seperate email is required. He also asked me to call my Doctor, and ask clarification of the records.

4. When I called my Doctor's office, they told me that someone (mostly from Banner) had called them asking to verify my med history, and asked them if there is history of coronary artery desease in my family. They told them that there is a history, but it may not be immediate parents. (honestly I do not know what in the doctor's original questionnaire has triggered this). Also EKG was optinal for me since I am only 42 with no signs of health problems.

Now given all this history, I want to mainly know the following.
1) Why in the earth the agent is asking me to email stuff, and call doctor's office, etc. Just to get lower premiums? or is he covering his ass? Is this ethical, or did I unknowingly get into something.

2) How does this Life Insurance things work. I think if they are not satisfied with all the cross-checking, they may quote higher than minimum premium - which is acceptable. However once the insurance is issued, can they recall it; or even deny my family any payment because they find some vital info was missing from the records in the first place.
(Not that I am hiding anything, but given the agent's weird moves, I hope he is not screwing things up to get me low premium.)

I know this is just LI, and not the end of the world. But just want to put this out there, and seek your thoughts.

Rupert
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Re: Buying Life Insurance

Post by Rupert » Mon Aug 28, 2017 7:06 am

Sounds to me like the underwriter is demanding more information about the health of your cardiovascular system. Your refusal to take the EKG in your doctor's office probably looks a little fraud-y to an underwriter, regardless of your true motivation for refusing it. The agent is probably concerned at this point that they won't write you a policy at all (or that they'll rate you) unless the underwriter's questions/concerns are addressed. Why don't you just agree to an EKG to put the matter to rest? It appears that you're not going to get the best rate without one. Edited to note that you should probably go through with this process or withdraw your application. If Banner denies you a policy because they fear you are trying to hide something about your heart, you'll have a hard time getting any insurance company to sell you a policy.

gurusw
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Joined: Sun May 11, 2008 9:37 am

Re: Buying Life Insurance

Post by gurusw » Tue Aug 29, 2017 8:36 pm

Hi Rupert, thanks for responding. I asked the agent about the things you had mentioned. He said that it's a misconception that if a company denies LI, other companies won't entertain you. They have to cite a reason for denying services; and if that reason is addressed the other companies should not have any problem issuing a policy.

inbox788
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Re: Buying Life Insurance

Post by inbox788 » Wed Aug 30, 2017 4:40 pm

gurusw wrote:
Fri Jun 30, 2017 8:34 pm
I am 42 now, and my 10 year life insurance policy will be expiring in 2 years. Thinking back, I made a mistake by not buying a 30-year term policy then. However I want to correct my course asap. Hence I am thinking of getting a new policy right now, and canceling the old one. I need help with two items.

1) I am not sure how much amount of policy & how many years of policy should I buy. Going by conventional wisdom, I need to get insurance till I hit retirement, or kids finish school. By that measure, 20 years sound ok. But I do not own house yet. So not sure if that pushes me to get 30 year policy.
Also 10 times of annual salary is the norm for policy. But if I had gotten 30-year term policy 10 years back, I would have had smaller amount than today's calculations. So I am not convinced if I should be increasing the policy value. On the other hand, house prices have gone up considerably (in the area I live), so maybe I need to get higher policy value.
No, given your current health status (alive and not with significant disqualifying illness), you made the right bet. (BTW, if you had died, that would have been the right bet too. The only wrong bet is if you got an illness that made you uninsurable or raised your premiums). You should be able to get a 20 year policy for about the same as the 30 year 8 years ago (i.e. annual premium for 30 year for a 34 year old vs 20 year for a 42 year old). And you saved the higher premiums you didn't pay.

Like the fellow above said, don't cancel the 10 year during the last years when you're getting the best deal, unless you can get longer term for less (unlikely). But depending on the timing of the replacement policy, you may need to.

Again, no. My stopping points are when you don't need insurance anymore. If you have a survivors that need funds, then you may need insurance. That doesn't necessarily stop with college. You may want to keep options open if you wish to support them in graduate/professional school, and that decision may not be immediate. Also, if you have a surviving spouse or other dependents, they may need support as well. It is these potential needs that you need life insurance. So, if you don't expect to support the kids in higher education and the surviving spouse is self sufficient, you don't need life insurance.

Since you don't own a house, it's hard for you to plan how much you need based on how much the homes in your neighborhood are going to be worth in 10, 20 or 30 years. I'm not even sure it's wise or realistic to plan so. If you owned a home and were paying off a mortgage, it would be simpler to quantify the need. Save up, buy your home, and then worry about keeping it. Otherwise, get a $5 million policy 30 year policy and hope that home prices are affordable down the road, and if they actually come down, your heirs can buy a mansion. Not sure that's the intended need you're trying to protect.

My opinion is to buy the minimal insurance needed and invest the savings with the goal of getting to FI sooner, at which point, you no longer need life insurance and can save and invest even more.

MrsBDG
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Re: Buying Life Insurance

Post by MrsBDG » Thu Aug 31, 2017 1:35 pm

Underwriters have a hard time offering any coverage to any applicant if the medical records show a test was ordered by the doctor and then declined. How the conversation went with the doctor might not be accurately reflected in the medical records (CYA and all that)
I have seen clients go to the doctor for headaches, demand an MRI, but then not do it as they did not want to pay the deductible; see the doctor and describe all sorts of digestive symptoms, ask for a colonoscopy, but then not do it.
The doctor is recording notes in such a way that the health insurance company will not disagree with the procedure, but the life insurance underwriter is looking at all uncompleted tests as something that needs to be done.
Cardiac family history usually refers to heart attack etc before age 60 in a parent or sibling, some companies include grandparents, some companies look at diagnosed cardiac disease, not just deaths, so at times changing companies can be the smart move.
Ohio & Banner do not allow preferred best rates if a parent or sibling has been Dx with heart disease before age 60, Cincinnati does.
It is not unusual to have higher than normal BP during the exam, most examiners take three readings, but those are averaged and would also be averaged with your medical records, if obtained. I'm unfamiliar with a company merely interviewing the doctor, in my experience the underwriter requests and reviews a copy of your medical records. This allows them to offer the best rate for which you qualify. However, your EKG does sound like it is confusing things, were it me, if my records say the doctor recommended an EKG, I'd probably just do it.

gurusw
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Re: Buying Life Insurance

Post by gurusw » Sat Sep 02, 2017 1:40 pm

Thanks for the responses. Banner is actually demanding me to get EKG on their cost. I am going for it.

Agent also wants doctor to provide written record that there is no cardiac history with my parents. I am gonna try, but not sure whether the docstor is comfortable.

inbox788
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Re: Buying Life Insurance

Post by inbox788 » Sat Sep 02, 2017 9:57 pm

gurusw wrote:
Sat Sep 02, 2017 1:40 pm
Agent also wants doctor to provide written record that there is no cardiac history with my parents. I am gonna try, but not sure whether the docstor is comfortable.
Wow, and what's the doctor going to do? Become a detective or do a complete genology? Aside from knowing the parents or having them as patients (which may be common in smaller towns), where is the doctor getting this history? Most likely from the patient. INAL, but I don't see any problem with the doctor writing a note saying he has no knowledge of any cardiac history in any of the patients relatives, after all, it's documented in the medical record. And even if he makes a mistake and misses a questionnaire answer that might have been answered by the patient, is he going to become liable for a life insurance claim if you die from a heart attack? He's not working for the insurance company and doesn't have any obligations AFAIK. And even if he was hired by the insurance company, I don't think there any real risk. It's mainly there as a deterrent and check from folks lying, but not all that useful if you ask me.

gurusw
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Joined: Sun May 11, 2008 9:37 am

Re: Buying Life Insurance

Post by gurusw » Sun Sep 17, 2017 8:49 pm

Thanks for the replies. Things have progressed. My EKG came normal. Meanwhile my doctor was never contactable. But Banner has moved on, and they are giving me their preferred rate - as per the agent. Have not received their paperwork yet. Cincinnati Life has already given me their quotes for P1 rate class. Just waiting for Banner so that I can make final decision on insurance value & term.

The agent (the one whom I had conacted through Term4Life) is now trying to sell me universal life policy in addition to term life. I already know from this forum that Univ Life is not to go for. However he is not selling it from life insurance perspective. He is selling it as a way of safe-guarding the investments. Details below:

This is Indexed Plan from North American.
It has Guaranteed Safety, meaning Profit when market (S&P) goes up, never lose if down. (No negative returns, 2.5% minimum return every year). Profits are capped at 12.5% at present.
It has Historical average 8%+ tax-free
No Restrictions - Grow and spend money tax-free any time for any purpose.
Liquidity - Withdraw or re-deposit funds with no cost, fees, tax or IRS reporting.
College Funding - Pay expenses in the safest, most flexible and reliable way.

Please let me know what do you think. I can get more information from him to arrive at the right decision.

Again thanks a lot for all of you for your patience in my journey here. Unlike some other Internet forums, this forum has very caring & helping folks around. I appreciate all the help.

Coachrhino11
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Re: Buying Life Insurance

Post by Coachrhino11 » Sun Sep 17, 2017 10:23 pm

Just wondering, anything wrong with insurance.com? I believe we went that route and wife has banner and I have another company and are about to get tests done again. I like idea of getting free blood tests done every 5 years or so. Iipid panels alone not cheap if paying on own.

gurusw
Posts: 58
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Re: Buying Life Insurance

Post by gurusw » Wed Sep 20, 2017 8:40 pm

gurusw wrote:
Sun Sep 17, 2017 8:49 pm
The agent (the one whom I had conacted through Term4Life) is now trying to sell me universal life policy in addition to term life.
Sorry for the typo. It should have said Term4Sale, not Term4Life.

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gasdoc
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Re: Buying Life Insurance

Post by gasdoc » Thu Sep 21, 2017 11:37 am

The agent can drive a Honda off what he makes off your term life policy. If he sells you the whole life policy, he can drive a Lexus. How badly do you want to make his Lexus payment? I would say, "thanks, but no thanks." Plain old mutual funds will yield better, with lower fees, and they can be sold at any time without a penalty. You are thinking about moving from a commodity where they have to compete only on price (term life) to one where they compete on one sided knowledge of the product (they know all, you know little). Just say "no" or you will later be writing this forum asking the best way to get out of a bad product you bought.

gasdoc

gurusw
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Re: Buying Life Insurance

Post by gurusw » Mon Oct 30, 2017 8:00 pm

gasdoc, thanks for your advice, and saving me headache.

Meanwhile I received the best rate from both Cincinnati & Banner. I started paying their premiums by staggering the policies. I also asked for the lab results from both Banner & Cincinnati. As I went through these, I noticed that my height is recorded as 5'1" instead of 5'10". As a results, my BMI is on the higher side, and out of range.

I have gotten the best rate from both the companies. But if it comes to claiming the insurance, I fear that the height descrepancy may become the issue. Should I notify these companies about this? I had asked the same question to my agent on email, and he is not replying!

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